President Mauricio Macri has announced another economic relief measure in the wake of this week's steep devaluation of the peso.
The Juntos por el Cambio leader, via a video released to social networks, announced Thursday that a series of food products from the basic food basket would have IVA (VAT, value-added tax) removed from them – items such as bread, milk and other foods – until December.
The move comes in the wake of severe currency turbulence, which has seen the peso's value cut by more than 20 percent against the dollar since Monday. Previously IVA stood at 21 percent.
"It is the first time in the history of the country that IVA will be eliminated on food products," said Macri in his video.
The measure "will help offset the impact of the devaluation on prices," the government said in a statement.
Two-and-a-half months out from October's presidential election, the president has now unveiled a raft of measures aimed at those struggling with falling purchasing power and runaway inflation, which reached as high as 47 percent last year.
According to official data, prices have risen by 25.1 percent in just the first seven months of the year, with this week's devaluation expected to hit pockets even further in the coming weeks and months.
The full list of items that will now be exempt from IVA includes bread, milk, sunflower oil, sugar, dried pasta, rice, wheat flour, polenta, yerba mate, preserves, yogurt and eggs.
The objective is to "lessen the price increases" that will follow the devaluation of the peso, Production and Labour Minister Dante Sica confirmed at a press conference.
Sica clarified that the measure will not imply an automatic price drop and confirmed that his ministry would carry out spot-checks at stores to ensure they are complying with the measure.
Reducing IVA on food items has historically been a demand put forward by unions, social organisations and leftist parties. In the past Macri has described such demands as "populism and demagogy."
Sica rebuffed claims that the government was seeking to curry favour with voters following his poor showing in the PASOs. "This is not demagogy or electoralism," he told the press.